Tesla Inc (NASDAQ:TSLA) Seem To Be Running Into More Troubles Than Progress


Tesla Inc (NASDAQ:TSLA) has announced that it is moving to 24-hour operations at its assembly plant located in Fremont, California. The company has also indicated that in order to facilitate its operations and fast track quick production, it will be hiring 400 people weekly for the next few weeks. The move is an effort by the company to timely deliver cars to customers on its waiting list.

Many have interpreted this move as a sign of desperation and a frantic attempt save its name. With the launch of the Model 3 which performed dismally, the hiring of new staff may only make matters worse for the company. However, Elon Musk, the company’s CEO has indicated that the hiring spree is a clear show of the company’s sign of confidence in its operations as well as the ability to increase its production by the end of June so as to meet the growing demand for Model 3, the company’s entry-level electric car.

Additionally, the company is like to get worse very fast financially. It is expected that the company may report lower-than-expected results in its first quarter report expected to be announced on Wednesday. This is due to the company’s lower-than-expected production of the Model 3 cars. Tesla’s second quarter results will be under immense pressure after the CEO admitted that the company depended heavily on automation. The company will face huge labor costs in addition to being forced to write down millions of dollars spent on automated machinery which the company is currently getting rid of from its factory.

The billionaire boss has now admitted that the company underrated the power and potential of human resource. However, many have argued that employing more people may not necessarily increase efficiency for the company. Tesla tripled its workforce between 2014 and 2017, but it has had stagnated revenue per headcount since it is unable to produce many cars. The company’s revenues per headcount have fallen far below that of Ford Motor and General Motors Company (NYSE:GM).

Musk took to Twitter and projected that the company will be profitable and that it would have positive cash flow for the second quarter. He noted that the company may not need to raise additional capital from its investors.